New age venture financing in renewable energy: Solar Renewable energy venture financing home

New age venture financing in renewable energy:


Solar energy is now widely regarded as moving toward a market-driven growth stage. This transition from a strictly technology-based growth period has pros and cons for those in the field raising seed capital. Essentially, the broader drivers of firms attaining funding in solar are threefold. Market share, value-based integration, and growing productivity capability are of upmost importance. Industry momentum is currently a factor in a non-optimal economy, too. Taking this sector's climate into consideration, following are the basics for new solar ventures seeking financing.

Current strategy to follow

The basics

Because the industry remains in growth mode (but is not yet consolidating), optimal timing and detailed plans for gaining market share and expanding into emerging markets seems to be the most consistent thing that investors are looking for. This means that your firm will need to be sure to analyze the political and economic climate of any market before constructing and negotiating plans to tap into it. If there are doubts about a regionís stability, the timing is likely not right to infiltrate it for business. Make your diligence in this regard clear to investors.

Achieving value chain integration can best be done through thorough diversification of your products and their respective uses. For any start-up, this is often difficult ó such activity is largely associated with larger, established firms. Itís vital for those in solar, however. This means that youíll need to devise various uses for a likely limited pool of products. Itís time to get creative, portraying the uses simply and confidently to investors. Solar panels should thus not be your sole product. If it is, itís time to diversify away from traditional home or commercial roof usage.

Production capability can best be conveyed with a proven, patented process or economies of scale. Economies of scale may seem obvious, but as competitive as the solar sector is starting to be, youíll need to illustrate some sort of headway or prospects in that area. It canít go unmentioned in your pitches. Your firmís ďprocessĒ is your baby. Protect it and improve it. But keep it simple when describing it to investors.

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  • Other tips and tricks

    In a relatively established (or at least far from groundbreaking) sector like solar, you need to rely more on internally-oriented financing before any significant external investor contribution can be expected. Bootstrap and take as many "small" loans from family, friends, and commercial banks as needed to establish some consistency in operations. Then pursue the 'multi-million' individual deals. For seed capital, focus on funds or institutions.

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